DCIT, GANDHINAGAR CIRCLE,, GANDHINAGAR vs. GUJARAT INDUSTRIAL INVESTMENT CORPORATION LTD., GANDHINAGAR

In fact, the addition was made to the total income of the appellant being provision for non-performing assets of Rs.17,86,35,487/- and Rs.1,36,07,588/- for provision diminution in value of investments written back by the appellant during the year under consideration. The facts of this addition is that the appellant had made provision for non- performing assets ("NPA") and diminution in value of investments in its accounts for the previous year relevant to AY 2001-02 to 2009-10. However, while computing total income of the aforesaid assessment years had been disallowed in computing the total income for those years and accordingly, the same was not claimed as deduction and added back to the income in the computation of total income for such years. During the year under consideration the same provision being excess was written back and credited to the profit & loss account for the year under consideration in accordance with the guidelines of the Reserve Bank of and Accounting standards issued by the Institute of Chartered Accountants of India ("ICAI"). However, while preparing the computation of total income, the same was excluded from computation of taxable income on the ground that the same cannot be taxed in the year of write back when excess provision is credited to the Profit & Loss Account because the same was not claimed as deductible in the year in which the provision was debited to the Profit & Loss Account. In appeal, the Learned CIT(A) observed that the similar addition which was made by the Learned AO for A.Y. 2012-13 in assessee’s case was deleted by him furthermore, even in 2010-11 on the similar facts and circumstances of the case, the AO was directed to delete the similar

Heard the respective parties, perused the relevant material available on records. We have also carefully considered the order passed by the Learned ITAT in ITA No.2899/Ahd/2013; relevant portion whereof is as follows: “The Revenue has raised the following grounds of appeal. "1. The learned CIT(Appeals) has erred in law and on facts in deleting the addition made by the AO amounting to Rs.24,64,63,140/- on account of NPA provisions written back of earlier years. 2. The Learned CIT(Appeals) ought to have held that the assessee is not entitled to relief twice in AY 2004-05 and 2010-11 in the same way he has held that same income cannot be taxed twice. 3. The learned CIT(Appeals) has erred in law and on facts in allowing the assessee to reduce Rs.24,64,63,140/- on account of NPA provisions -written back, -while computing the book profits u/s.115JB. 4. The learned CIT(Appeals) has erred in law and on facts in directing the AO to give the benefit for prior period adjustment of Rs.4,82,975/- -while computing income u/s.115JB. 5. On the facts and circumstances of the case the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. It is therefore prayed that the order of the learned C1T(Appeals) may be set aside and that of the A. O. be restored to the above extent." 98. The First issue raised by Revenue in this appeal is that the Ld.CIT(A) erred in deleting the addition for Rs.24,64,63,140/- being provision for diminution in the value of the investment.

Ground No.2 : By way of second ground of appeal the revenue has challenged the order passed by the Learned CIT(A) in deleting the addition of Rs. 19,22,43,075/- made by the Learned AO being provision for non-performing assets written back to earlier years audited to the book profit u/s 115JB of the Act.

In the return of income, the appellant claimed that the aforesaid written back of provision for NPA is credited to Profit and Loss account should be excluded from computation of book profit under Clause (i) of Explanation 1 to section 115JB of the Act. In fact, it has written back provision for NPA of Rs. 19,22,43,075/- being provision made during the earlier years and amount was credited to P&L Account for the year as income of the year. The contention provided by Clause (i) regarding crediting the amount withdrawn from reserve or provision credited to P&L account is fulfilled since the appellant has credited the amount withdrawn from provision credited in A.Y. 2001-02 to 2006-07, the appellant has substantial losses and even after reducing the loss by the entire provision for NPA created in those years, there’s book loss. In respect of A.Y. 2007-08 to 2009-10, the appellant added provision for NPA to the book profit and paid tax on book profit under section 115JB of the Act. The working of being profit for A.Y.2001-02 to 2006-07 was also provided to the authorities below from where it appears that even after adding provision for NPA credited in such years there is a book loss. In A.Y. 2007-08 to

At the time of hearing of the instant appeal, the Learned Counsel appearing for the assessee submitted before us that the issue is covered by the judgment passed by the Learned ITAT in revenue’s appeal in assessee’s own case for A.Y. 2010-11; copy whereof has been submitted before us being part of the record at Page No.115 of the Paper Book. In that view of the matter, the revenue’s appeal is being devoid of any merit and thus liable to be set aside as also submitted by the Learned AO. However, the Learned DR failed to controvert the same.

Heard the respective parties, perused the relevant material available on records. We have also carefully considered the order passed by the Learned ITAT in ITA No.2899/Ahd/2013; relevant portion relating to the identical issue whereof is as follows: “100. The second issue raised by Revenue in this appeal is that the Ld. CIT(A) ought to have held that the assessee is not entitled to the relief twice in the AY 2004-05 and 2010-11. 101. We have already adjudicated this issue hi the ground No. 2 of the CO No. 106/Ahd/2014 raised by the assessee vide Para No 95 of this order. 102. Therefore respectfully following the same we allow the ground of appeal of the Revenue in terms of the direction as stated above. 103. The third issue raised by Revenue in this appeal is that the Ld. CIT(A) erred in deleting the addition for Rs.24,64,63,140.00 on account of NPA written back while calculating the profit under section 115JB of the Act. 104. At the outset, we note that the identical issue in the ground no. 4 of the appeal of the assessee pertaining to the assessment year 2008-09 in ITA 208/Ahd/12 has been adjudicated in favor of assessee vide Para No. 60 of this order. Therefore,